Sydney - the coming correction 2018-2022

Discussion in 'Property Market Economics' started by sash, 3rd Dec, 2017.

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  1. big max

    big max Well-Known Member

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    Fully agree.
     
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  2. Sackie

    Sackie Well-Known Member

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    It's the heightened emotions particularly in this asset class that can't be fully explained by numbers, economists and general logic. Thats why i love real estate as an asset class. Invest in/build high demand stock playing to specific market demographic emotions and sweep up the $$$$$
     
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  3. S1mon

    S1mon Well-Known Member

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    using your 550k logic then Shalvey etc is still affordable too ;) but thanks for the update on your CG, just what I wanted to know...

    as for me I have nothing to prepare for, just hold the one crappy house out in the west, and will hold for another cycle or 3. wish I had more to worry about

     
  4. sash

    sash Well-Known Member

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    Great...that sums it all up...based on your posts I thought you had a massive portfolio....the brilliance of the internet huh?:)
     
  5. pwnitat0r

    pwnitat0r Well-Known Member

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    You can't apply a general statement to the whole market IMO.

    Some things will go down, some things will go up, some things will go sideways.

    Personally I think apartments are over done and there is a demand for good quality family housing.
     
  6. WattleIdo

    WattleIdo midas touch

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    You may be right about heading into a slump at some point in the future - I hope you have a good buffer for your portfolio, just in case.
    I'm not an economist (officially :)) but I do know that one of the main causes of the Great Depression in the 30's was the Protectionism that was rife at the time. The worse the various economies became, the more they closed up shop and the situation became a downward spiral and then there was just nothing for 10 years. Unfortunately, it took WWII to get things moving again.
    This is why the govt gave everyone a $900 'stimuls' back in 2009. The yanks did it, pretty sure the Brits did it, pretty sure most advanced economies did it. Gotta keep things moving when there are Wall Street crashes..
    Don't know if you know anyone from that 1930's era but you'd probably really enjoy talking to them. Maybe see if you can visit some oldies and get into a conversation? ;) Seriously, would be a win-win. You'll then realise how much our knowledge has accumulated and accelerated since then.
    Never say never, of course. But even if we can't overcome greed and its consequences, we have learned about not getting into that same downward spiral once the dominoes start falling.
     
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  7. Simon_S

    Simon_S Well-Known Member

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    Here's a good vid:

    Protectionism isn't so much a cause but more a reaction to the unfolding crisis.

    https://www.dartmouth.edu/~dirwin/Eichengreen-IrwinJEH.pdf

    The generation from the 30's was far more self sufficient and knew how to grow food and other practical skills.

    That's the problem we haven't and as usual the same mistakes are made with ultimately the same consequences. 10 years after the GFC the Global Economy still isn't fixed.
     
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  8. Kis Kis

    Kis Kis Well-Known Member

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    What about small cities of NSW? Central coast? Nowra? Newcastle? If sydney faces a massive drop of 30% , will it be nationwide/ statewide drop?
     
  9. sash

    sash Well-Known Member

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    Not all of Sydney will drop...some parts may and that could a particular product ie OTP.

    When the cycle complete same thing happens in other market but naybe shallower
     
  10. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    I think this is the biggest and most insidious risk of all. If credit policy doesn't allow for extension of these loans, there will be some big problems.
     
  11. Perthguy

    Perthguy Well-Known Member

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    True, but 5 years is a decent amount of time for people to prepare, but only for those people that do. For example, they could build up a great cash buffer in 5 years to cover higher repayments. Or strategically deleverage or both! Or they can pay down a loan to the point where they can refinance to a longer P&I term to lower repayments. There are a lot of options for people who prepare.
     
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  12. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Right. But how many people will? This forum is an incredible small sample and most people here, by virtue of being here, are more aware than the greater public.
     
  13. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    "building up a great cash buffer" is impact, as it is generally removal of funds from the future investments, reducing demand --> affecting supply & demand ratio.
     
  14. Perthguy

    Perthguy Well-Known Member

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    Yes, in a way. That is the point I made about the large amount of cash and deposits that Australians have saved. But since those funds are invested by banks, doesn't that money go back into the economy anyway? I was told that it does.

     
  15. Perthguy

    Perthguy Well-Known Member

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    Unknown.
     
  16. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    I don't see your point... I meant that when economy goes down, 1T cash won't help as it is already invested somewhere. Now if cash, removed from RE sector, will be invested by banks, then RE will go down. Banks / Super funds invest into RE as well, but only partially, so it won't be compensated.

    that surplus of cash may go either to the local economy or it would be investments into foreign countries economy, or both - depending on economic conditions.
     
  17. Perthguy

    Perthguy Well-Known Member

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    I don't understand. I am not talking about "saving the economy" if there is a downturn, I am asking what the impact is if people save cash going forward. Previously you mentioned that saved cash is invested somewhere.

    So, if people save cash from now to build up a buffer, is it invested and goes back into the economy or not invested and does not go back into the economy?

    I guess I just don't understand what you mean by "'building up a great cash buffer' is impact". Isn't it really just moving cash from one pocket to another pocket?
     
  18. Perthguy

    Perthguy Well-Known Member

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    An individual investor building up a cash buffer is unlikely to impact house prices anyway. If they don't invest that cash in real estate then there are plenty of people who will step in to take their place.

    Australians have already been saving a lot and that does not seem to have impacted property prices.
     
  19. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    when I said that, we discussed the effect of cash on economy in case of downturn. I said that cash wouldn't save it.

    but now, when I said it would be an impact, I meant impact on RE. Economy <> RE, alright? I thought it was clear.

    I mentioned in another thread 6 months ago that APRA regulation would devide people into 3 groups, and each group would have negative impact on property prices. When you save cash to be prepared for future IO-->P&I convesion, it's just moving from one group to another, the overall impact is the same.
     
  20. AlexV_Sydney

    AlexV_Sydney Well-Known Member

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    prove it (2nd statement)
    I thought you agreed that cash mostly doesn't belong to those who is investor with loans. They're either wealthy people without debt or students/new residents/potential FHBs
     
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